TOKYO — Honda Motor Co. shares rose 7.1 percent in Tokyo trading, closing at ¥1,785, after the automaker reported its first operating loss since 1956. The company posted a first-quarter operating loss of ¥29.8 billion ($202 million), missing analyst expectations for a ¥120 billion profit. The quarter marked a sharp reversal from the ¥253 billion operating profit recorded in the same period last year.
The market's positive reaction stemmed from Honda's electric vehicle transition plans, not the quarterly results. Management detailed a ¥10 trillion ($68 billion) investment over the next decade for battery development, software integration and new EV platforms. This capital commitment supports Honda's goal for 100 percent electric vehicle sales by 2040, a target investors now view as credible.
Nomura Securities upgraded Honda to a Buy rating, setting a ¥2,100 price target, up from ¥1,850. Analysts cited the company's commitment to scaling EV production and its collaboration with General Motors on affordable EVs as key catalysts for long-term value.
Honda plans to launch 30 new EV models globally by 2030, targeting annual production of two million units. This pivot includes establishing an EV production line in Ohio and securing battery supply chain agreements with global partners. The company's established manufacturing base and global distribution network provide a foundation to compete against both legacy automakers and new EV entrants.
Despite the short-term earnings pain, Honda's current valuation at 0.7 times book value presents an entry point compared to peers with less ambitious electrification targets. The stock's post-earnings surge indicates investor confidence in management's ability to execute this costly but necessary shift.
